Small Business Loans

Posts tagged: SEFA – Small Enterprise Finance Agency

SEFA – Small Enterprise Finance Agencyis a new funding option for aspiring business owners. An agency owned by the IDC or Industrial Development Corporation, the main focus of SEFA is to provide finance of up to R3-million to small businesses to boost job creation and further grow entrepreneurship in the country. It makes use of banks, financial institutions and direct lending to do this

Small Business Enterprise

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An important feature that sets SEFA apart from other lenders is that it works to break the current pattern of big businesses in major contracts. It will work to include small businesses in this monopoly by giving them access to bigger contracts where their expertise can be used. This is a wonderful opportunity for small up-and-coming businesses to get a foot in and create a niche for themselves in a competitive market.

Ways in which SEFA – Small Enterprise Finance Agency aims to create a better footing for small businesses include the following:

Making access to much-needed funding easier to small businesses who have been denied this by bigger lending institutions due to certain risk factors

Giving them access to big contracts that were previously exclusively given to established businesses

Encouraging large firms to act as mentor to smaller businesses

Creating mutually beneficial partnership between big and small businesses with regard to inclusion in supply chains and the like

Focus on establishing entrepreneurship in sectors that require growth like mining, tourism, infrastructure support and green economy

Financing options offered by the agency include:

Bridging finance

Revolving loans

Asset finance

Working capital

Term loans

How To Secure Funding

The main service of SEFA will be to make business finance available to small businesses who have struggled to receive this funding elsewhere. The agency is willing to overlook certain risk factors in an effort to boost entrepreneurship and job creation. However, funding will not be haphazard or cheap.

For instance, interest rates will be calculated according to the risk factor presented by the business. On average, interest will be prime plus 3-5% and then adjusted depending on how risky the venture is. You will have to do the following to secure a loan:

Set up some time to meet with SEFA

Have a good business plan to present. Your business plan must outline what your business is, how much funding you will require and what you will be using that funding for. You must also include financial forecasts and projections so that the viability of your business can be properly analysed.

During your application process, SEFA will analyse your business proposal and decide whether your business can afford to repay the requested finance out of its cash flow over a specific time period.

The nature of your business will also play a great role in the application process because SEFA specifically wants to focus on smaller businesses that cater to gaps in the market. Your chances are therefore better with SEFA – Small Enterprise Finance Agency if you can prove that your business is providing a much-needed service or product in an under-developed sector.